Pondering Muni-Bond Taxes

Proposals to tax the now tax-exempt securities take various forms, none of them good news for investors.

That question, in some form, will keep vexing municipal-bond investors and issuers alike until Congress decides on some combination of tax hikes and spending cuts. For now, a change to muni tax treatment is seen as a plausible outcome of deficit-reduction negotiations ahead of January's "fiscal cliff."

Any changes probably would accompany a jump in the top income-tax rate...